Friday, February 10, 2012

A Tale of Two Settlements

So yesterday, there were two big settlements: Greece, and the Mortgage Mess.

Completely independent of each other, both settlements not only happened on the same day, they happen to highlight two issues which ought to be bugging us all like cockroaches crawling through our underwear.

Issue One is how in both cases, the Too Big To Fail banksters won—and they won big. Again. Insofar as the mortgage settlement goes, they got what amounted to a speeding ticket, while getting a Get-Out-of-Jail-Free card on the worst of the robo-signing and illegal foreclosures scandal. And insofar as the Greek situation goes, the banksters have gotten the IMF, the ECB and the EC to essentially put the Greek people’s collective nuts in a vise and squeeze until they scream “θείος!” (“Uncle!”)

Issue Two is the mainstream media’s spin on these two settlements: How the completely cheerleadery, near-sycophancy of the MSM serves to both obscure how big the banksters won in both settlements, and to give us all a false sense of security. From the MSM, we hear that Greece has been “bailed out” and the Mortgage Mess has been “fixed”, and that the banksters are “getting their comeuppance”—so we get the false sense that the world is right as rain, and everything can slowly go back to normal.

But the world is not right. We will not be going back to normal any time soon. The banksters are not getting righteous justice.

Rather, the two settlements go to show how crony-corrupt our particular epoch’s Global Capitalism really is: The banksters rape the people of two countries, and the mainstream media cheers.

Let’s go over each of the two settlements, and pick apart their implications.

The Mortgage “Settlement”

The ballyhooed “Mortgage Settlement” is a big ol’ pile of crap—plain and simple. President Obama called the $25 billion deal the biggest settlement since the one with Big Tobacco—but that settlement, at $350 billion, was over ten times the size of this one. Actually, 14 times bigger, to be precise. And when you look at actual out-of-pocket costs (which I will below), you realize the Big Tobacco settlement was sixty times bigger.

And of course, the mortgage mess is a helluva lot bigger than the suits involving Big Tobacco.

To understand why the settlement is a steaming pile of shit, we have to understand two things: What the problem is, and what the settlement brings to the table to solve the problem.

This is the problem: About 20% of all homeowners are underwater, adding up to about $700 billion in negative equity in the U.S. housing market today. That is, if you add up the difference between what underwater homeowners owe on their mortgages and what they could realistically get in the current housing market, it totals $700 billion. On average, that’s about $50,000 per house.

Additionally, 750,000 people lost their homes to foreclosure between 2008 and 2011—of which many (most?) were processed improperly. Processed illegally, in many (most?) cases.

As to whether “many”, “most” or “all” of those foreclosures were processed merely improperly or in fact criminally, we’ll now never know: The settlement releases the banks from prosecution for these 750,000 foreclosures.

That was one part of the settlement: No Federal prosecutions.

The other part of the settlement was how much the banks had to pay. And that dollar figure is pathetic when you look at the headline number—but even worse when you look at the actual number.

The mortgage settlement totals just shy of $25 billion. But of that figure, only $5.8 billion is “fresh money”—that is, money that the banks have to put up out of pocket.

The rest is loan modifications—that is, changing one loan for another. Essentially an accounting move, not a cash-bleeding penalty.

So the banks are paying out—in total—a mere $5.8 billion, while they are getting bullet-proofed from Federal prosecution for all the mortgage shenanigans they were carrying out.

That is what the ballyhooed “Mortgage Settlement” comes down to: The Obama administration plea-bargained a serial killer down to a speeding ticket.

And insofar as the rest of the settlement money goes—the refinancing of about $19 billion—the refinancing marginally lowers the payments for some of the 14,000,000 homeowners who are underwater. Less than half actually, as the settlement does not cover mortgages held by Fannie Mae and Freddie Mac. But it guarantees that the banks have first dibs to recover their money, if and when some of these 14,000,000 homeowners begin to default.

(Yves Smith at naked capitalism has a much more detailed discussion of the financial implications of the settlement here. Her reporting and analysis have been the best in the business, insofar as the Mortgage Mess and this execrable settlement is concerned.)

In other words, the banksters won—again.

The most despicable part is how much the banksters will have to pay to those families whose homes were improperly—illegally—fraudulently—foreclosed upon:

The princely sum of between $1,500 and $2,000.

Now, I’m not saying that someone who didn’t keep up with their mortgage payments and lost their home to foreclosure should get their house back for free just because of faulty paperwork—I’m not saying that at all. Nor am I saying they should get a gazillion dollars from the bank for screwing up the paperwork in a foreclosure that was justified.

The problem is, a non-trivial number of those 750,000 lost their homes even though they were up to date on their payments. Hell, there were even cases where people who were foreclosed upon and had their homes taken away from them who did not owe a mortgage loan on their property. (Example here.)

All of this happened because of the foreclosure mills and the famed robo-signing. Banks declared a loan in default, fobbed off the property to a specialty law firm—a “foreclosure mill”—which then in turn hired minimum wage workers to illegally sign the documentation to carry out the foreclosures. That was “robo-signing”.

The robo-signing was forgery—plain and simple. It was fraud. The fact that many—perhaps even most—of these foreclosures were justified does not excuse the use of fraud to carry out the foreclosures. And the fact that a non-trivial number of those foreclosures were completely unjustified—and in some cases amounted to the bank stealing people’s homes—makes this settlement unconscionable.

With this settlement, there will be no more criminal prosecution—even for cases where the bank literally stole people’s houses!

All the bank has to do is pay between $1,500 and $2,000. For stealing your house.

Prosecuting the robo-signers would have led to prosecutions of the foreclosure mills—which would have led to prosecutions of the banks which pressured the foreclosure mills to hire the robo-signers—which would have meant jail-time for the bank executives who ordered this criminal activity.

That’s how prosecutors work: They go after the small-fry, then get ‘em to flip on the big-fry.

However, with this settlement, the banks are released from further investigation of robo-signing—and therefore, of the improperly foreclosed houses—and therefore, the executives who ordered these illegalities and ordered this fraud are bullet-proofed from prosecution—and thus shielded from their richly deserved jail-time.

Sure, New York’s Attorney General can still proceed with his suit of MERS, the mortgage service provider—but MERS doesn’t have deep pockets, and isn’t even really the instigator of this whole mess.

It was the Too Big To Fail banks, and the criminal banksters who lead them. They were the ones who should be prosecuted, tried, convicted, and jailed.

But the banksters got off scot free: Serial killers, who plea-bargained their way down to a speeding ticket.

The Greek “Bailout”

On March 20, Greece has to pay out roughly €15 billion, to cover maturing bonds. Of course, they don’t have €15 billion. So they need a bailout. Again.

Greece is broke—there’s no other way to put it. It has debts which total 160% of GDP. So they’ve been negotiating with the International Monetary Fund (IMF), the European Central Bank (ECB), and the European Commission (EC), trying to get more money to avoid bankruptcy.

The Greeks want to avoid bankruptcy—while the Troika of the IMF, the ECB and the EC want to avoid a default. If there is a default, all sorts of events are triggered involving derivatives and other nasty pieces of financial weaponry, which will send the eurozone’s banking system into a tailspin.

Will the European financial system go bankrupt in the event of a Greek default? No one really knows—and no one really wants to find out.

So both sides have an incentive to sit at the table and reach an agreement.

However, because of the ongoing crisis, there is one inescapable problem that both parties are facing:

Greece’s economy is shrinking—fast. Year-over-year, tax revenue has fallen close to 20%. Businesses are shutting down—and the businesses that are opening up are mostly unemployed professionals trying to set up one-man shops. Unemployment is steadily rising, especially youth unemployment, which inevitably leads to streets protests and social unrest.

So when a country’s economy begins to shrink—and its tax revenue falls—and it begins to teeter on the edge of social instability—it begins to lose the ability to meet its financial obligations.

This is what is happening in Greece, because of the four months it has taken to finally find some kind of deal to save Greece.

Now, the deal on the table is for Greek bondholders to take a €100 billion haircut on €350 billion of outstanding debt—which is actually not that much, considering Greek yields are in the 32% range, but whatever.

What’s key is, the European financie ministers are insisting that the Greek levels of indebtedness shrink from 160% of GDP to 120% of GDP by 2020—

—even as the austerity measures the Troika is imposing severely cuts the public sector, reduces the minimum wage by 22% to €8,200 a year, and overall forcibly shrinks the Greek GDP on top of the natural shrinkage taking place because of the Greek depression.

I’m no Keynesian, as Paul Krugman can tell you. But the fact is, if you fire big chunks of your public sector, reduce the minimum wage, and squeeze higher taxes from the population, the GDP is gonna shrink.

So if the GDP starts to shrink, no way can you reduce debt levels from 160% of current GDP to 120% of 2020’s GDP.

In fact, if you’re hell-bent-for-leather on squeezing a country and insisting it pay down the debt, you are essentially setting the country up to ask for yet another bailout in the near-term future.

This is what the Troika is doing—all so that it can keep the European financial sector from realizing the losses on its stupid Greek loans.

So Greece and the Greek citizenry suffer, so that European banks don’t take a giant crap on top of Angela Merkel, Nicolas Sarkozy, Mario Draghi and Jean-Claude Juncker.

Ironically, had Greece been allowed to default and/or go broke back in May of 2010, when this mess first reared its ugly head, the Greeks and the eurozone would have been in much better shape today: Greece would have suffered Iceland’s short term fate—a crash—but then recovered, albeit slowly and painfully, but on a much sounder financial footing.

But in the European banker’s efforts to save their Greek investments, they have prolonged the Greek agony, while killing the Greek economy worse than an outright default and bankruptcy.

In fact, it is still possible to allow Greece to fail and let the chips fall where they may. But the eurozone leaders are so adamant about saving their banking sector, that they refuse to consider the possibility.

So rather than cutting off the gangrenous limb, they’re letting the gangrene spread, and get a lot worse—all in order to save the fucking banks. Again.

The MSM Cheerleading

This is what the New York Times had to say about the mortgage “settlement” when the news came out:

Advocates for homeowners facing foreclosure expressed cautious optimism after the settlement was announced Thursday morning in Washington. “We’re hopeful,” said Joseph Sant, a lawyer at Staten Island Legal Services’ homeowner defense project. “But we had a lot of programs that are good on paper. What will make the difference is that it’s vigorously enforced.”

President Obama declared the deal the largest federal-state settlement in the nation’s history.

“No compensation, no amount of money, no measure of justice is enough to make it right for a family who’s had their piece of the American dream wrongly taken from them,” he said. “And no action, no matter how meaningful, is going to by itself entirely heal the housing market. But this settlement is a start.”

Of course, the Times fails to point out that this settlement is not “a start”—rather, it is the end: The end of prosecutions against the banksters for their fraudulent foreclosures, the end of meaningful reform.

The mortgage settlement is a speeding ticket for a serial killer.

Yet the Times has the gall to add:

More than just an attempt to aid consumers and stabilize the housing market, government officials cast the settlement as an effort to finally hold banks accountable for their misdeeds, more than three years after the mortgage collapse brought on a full-scale financial crisis.

“Accountable”. Right. At $2,000 a pop for in many cases outright stealing a home, that’s the New American Accountability.

And talk about burying the lead! The Times piece waits four paragraphs to mention that fraudulently foreclosed homeowners are getting $1,500 to $2,000 as settlement for the illegal foreclosures. And then it waits another twenty paragraphs before acknowledging that it’s pretty paltry, the amount that will be paid to illegally foreclosed homeowners.

But then, the Times gets worse: Almost as if to add insult to injury, this morning—the day after the mortgage “settlement” announcement—it ran an editorial about—get this—how the mortgage settlement highlights the crappy architecture that the housing boom created in America! And how this crappy architecture ought to be fixed somehow! As part of the mortgage settlement!

Other MSM outlets had similar milquetoast coverage.

Over at Salon, Obama apologist Andrew Leonard can’t really spin the agreement as anything other than a complete disaster—so I guess kudos for having at least a shred of honesty for giving the true facts and meaning of the settlement in the first few paragraphs of his piece.

But then Leonard goes and writes:

A more interesting question to consider, however, is how the housing relief contained in this settlement fits into other administration housing policy efforts currently in the works.

First off, government negotiators are still working on roping another nine mortgage providers into the deal, which could raise the overall settlement total from $26 billion to around $40 billion. [Whoopie: All of $14 billion, thrown up at a $700 billion problem.] In March, the rejiggered HARP refinance program will kick in, presumably allowing hundreds of thousands of homeowners to refinance at currently rock bottom mortgage rates. There is also strong pressure coming from the Federal Reserve and the White House to convert currently unoccupied foreclosed homes owned by the Fannie Mae and Freddie Mac into rental properties, a step that would remove excess inventory from the housing market. [And of course, create excess rental inventory.]

Each individual nibble here is unlikely to make a profound difference, but taken together, all these initiatives add up to the most concerted effort the Obama administration has taken to date to bring relief to the housing sector. It’s also worth noting that it’s all happening without any help whatsoever from Congress. The approach does not address the desire for punishment that so many would like to see meted out upon the banks, but it will likely help spur additional economic growth. At a point when the economy already seems to have solid momentum toward recovery, every extra bit of help is gravy.

[Bracketed text and boldface by yours truly.]

I said that Leonard has at least some honesty left in him—but Felix Salmon at Reuters has absolutely none.

His lead sentence:

The long-awaited mortgage settlement is here! And it looks like a good one.

I’m fucking not kidding.

Then Felix Salmon—or rather, Felix Shill—goes on:

If you’re a bank shareholder breathing a sigh of relief, then, don’t. The only thing you’re protected against, now, is lawsuits over robosigning. [But then robosigning and fraudulent foreclosures were the biggest potential criminal and civil litigation issues.] Were those likely to cost $25 billion if they had gone to court? It seems unlikely to me that they could have raised that much. Other big-money lawsuits over securitization can and almost certainly will still be brought — which means that the big banks all still have significant litigation risk hanging over their heads.

So why did they do this deal? Well, for one thing, it’s not nearly as expensive as it might look at first glance. It’s not like they’re paying out $25 billion and getting nothing but a bit of immunity in return. A huge chunk of the money will go towards principal reductions on underwater mortgages — which means that it’s not really a cash outlay at all.

Notice how he starts off saying that bank shareholders shouldn’t breathe a sigh of relief—then deceptively says how the banks are shelling out $25 billion, when in fact it’s only $5.8 billion in fresh cash. But then at the end of the quoted passage, he admits how “a huge chunk of the money” is “not really a cash outlay at all”—as if this is a good thing.

Well, actually, it is a good thing—for the banksters and the bank shareholders. Which is Felix Shill’s—I mean, Felix Salmon’s real audience.

In Geneva recently, I had lunch with FT Alphaville’s Izabella Kaminska, in a restaurant in the old section of town. Izabella is a very smart woman: She was of the opinion that mainstream financial journalists aren’t deliberately dense, or beholden to vested interests—rather, she thought that they were simply sloppy: Pressed for time, not entirely familiar with the matters at hand, Izabella thought that they tended to take the easy way out, by simply regurgitating what they were told by bankers and authorities, and not applying critical thinking.

I wish I could agree with her—but I can’t. The Times piece might be excusable: Though it doesn’t highlight the real issues, and it buries some of the outrageousness of the settlement, there is an underlying tone of not-quite-buying it with regards to the mortgage “settlement”.

That very tone points to how the Times writers and editors realize that the settlement was a bunch of bullshit—a pass on the banksters.

Yet they didn’t follow through. They didn’t slice-and-dice the settlement, and report how pathetic it really is.

Someone like Andrew Leonard—an essentially partisan journalist who nevertheless tries to be somewhat fair—made a try at honesty with regards the mortgage settlement. But then spent a big chunk of his piece saying, basically, “Though it’s just crumbs off the banksters table, we ought to be thankful, because enough crumbs almost make a slice of bread!”

The most despicable is Felix Salmon: He is rah-rah-banksters-hurrah!, insofar as the settlement is concerned—which proves that he is nothing but a shill for the banksters, trying to get in good with them, at the cost of his intellectual honesty, not to mention his moral soul.

€8,200 a year is more than €680 a month. For a minimum wage! I live in the country north of Greece (Bulgaria) and I wish we had a "crisis" like theirs... My salary is about €420 per month - and it's by far not the minimum one; I'm a doctor at the Bulgarian Academy of Sciences...

Greece has lived for far too long beyond its means - it is time for it to face the reality. A few curious facts:

1) Till recently, Greeks were getting 15 monthly wages a year. Now they are down to 14 and are protesting the attempts to cut them down to 13. The last time I looked, a year still had only 12 months.

2) The Greek railways are state-owned and running huge losses. Most of these losses come from salaries to useless personnel. It has been calculated, that it would be cheaper for the state to close down the railways and pay everyone who wants to travel the what it would cost to travel the same distance by taxi.

3) There was a lake near Athens. In 1947 it was decided to dry it, in order to make a road. A state commission was created for the purpose. In 1952 the task was completed. The said commission still exists today, employs more than a dozen people, including a chauffeur.

4) A hospital in Athens is said to employ 17 gardeners. The said hospital has no garden.

I could go on and on... I'm not going to say that the Greeks have only themselves to blame (for gorging on cheap money and wasting it) but, just like the subprime borrowers who took loans they obviously couldn't afford, they aren't exactly blameless and had it coming for a long time.

Fuck wit shill. You blame ordinary Greeks for this. Fuck off. It is Politicians not ordinary people who made this happen. Stupid Crude thoughts like yours deserve a crude honest answer. Fuck Off. You want to punish poor ignorant people for Banks and Politicians Sins. Fuck Off.

Such snippets don’t mean much unless they are contextualized and calculated.

For ex. for the 13, 14 month’s salary (not 15th btw afaik), it all depends. Switzerland, for ex. commonly has a 13th salary - it is just a way to pay the yearly salary 13 times rather than 12, giving a ‘bonus’ for Xmas and for the month when many yearly bills must be paid (Dec. for the next year.) Many employers (state and private) in many countries offer direct benefits of various kinds - e.g. health insurance participation in the US, which the Swiss find corrupt and shocking! Perhaps you might want to take into account that - horrors! - many French employees can get free (or massively reduced) lunch, parking, transport, and cell phone.

Many if not most EU rail systems operate at a ‘loss’. They are subsidized, usually through democratic decision. Efficient transport is considered a common good, essential to all, and paid for in some measure by everyone, including those who never use it. (I don’t know about the state of the Greek system, it would need to be worked out.) Comparing with taxis is ludicrous, as energy costs/externalities are not computed, and in any case there wouldn’t be enough taxis to accomplish the task, and if there were, no traffic would move one inch.

As for 17 gardeners, who knows. I know one US co. where the boss has 3 secretaries, none of them do any work.

The 13th salary, at least where I live, was introduced when the payment was switched from weekly or bi-weekly (the common schedule in the past) to monthly (the common today). The monthly salary was set as a 4 week salary every month + 1 to compensate for the additional days above 28 in (almost) every month. So in the end you have 26 bi weekly salaries in a year.

Regarding the rail, when you destroy them like in Argentina on the basis that they operate at a loss(Argentina is a good example of what not to do) you get: - A huge ammount of trucks and buses on the road- Road maintenance skirockets or roads are destroyed- You use more oil, if you are a net importer (as Greece is) that is a problem.- Road accidents also climb in 89, before the rail was dismantled (in Argentina) the accident rate was 1000 per million vehicles, in 95 the accident rate went to 1500, after years of advertising, safer cars, more road police, mandatory annual vehicle inspections, etc the rates went just back to the previous number. The net result: 10000 to 20000 people killed. Nobody says this, but shutting down railroad in favor of trucks should be considered a crime (10000 people, think again)- You get a single union (truck drivers) that is able to paralyze your country.

Last: if I offer you a job that pays well and you have to do nothing, and you have no expectations about your career... don't tell me that you will not take it. It's your employer fault. Now, if you were stupid enough to believe that it can last forever, and when it is over you go out to burn buildings... well... while that stupidity is your fault it does not relieve your employer from the original sin.

Does avoiding pain or providing benefits justify theft?If your economy does not produce enough wealth to pay for benefits, should the Government counterfeit money or borrow what it can not pay back?Are you people morons?

Illegal foreclosures? In almost every case what this really means is the bank didn't cross a "T" or dot an "I" and some shyster lawyer was able to use a buddy compliant judge to create a sham legal result. No one disagrees that the bank did not own the loan that they were foreclosing on and no one disagrees that the mortgage holder was in default. This was a trumped up situation precipitated by the federal government. The feds passed legislation requiring the banks to do exactly what they did and when it all fell apart the legal system and our administration stood around pointing fingers at others.

The banks agreed to this sham justice because the threat if they did not was endless legal trials and litigation. But rest assured the bank customers and anyone even non-customers who makes any economic transactions will pay. This is not about anything more then making Obama look like he cares about the common man.

Illegal foreclosures? In almost every case what this really means is the bank didn't cross a "T" or dot an "I" and some shyster lawyer was able to use a buddy compliant judge to create a sham legal result. <<>>

No one disagrees that the bank did not own the loan...<<>>

... that they were foreclosing on and no one disagrees that the mortgage holder was in default <<>>.

This was a trumped up situation precipitated by the federal government. The feds passed legislation requiring the banks to do exactly what they did ...<<>>

... and when it all fell apart the legal system and our administration stood around pointing fingers at others. <<>>

The banks agreed to this sham justice because the threat if they did not was endless legal trials and litigation. <<>>

Illegal foreclosures? In almost every case what this really means is the bank didn't cross a "T" or dot an "I" and some shyster lawyer was able to use a buddy compliant judge to create a sham legal result. ***When you fraudulently claim title when you don't have it, that's...what's the word again? "Fraud." Those effing "T"s and "I"s are a real pain in the ass to the banks.***

No one disagrees that the bank did not own the loan...***sidebar: what the eff is that phrase SUPPOSED to mean?***

... that they were foreclosing on and no one disagrees that the mortgage holder was in default ***irrelevant to the legality/standing of the foreclosing entity***.

This was a trumped up situation precipitated by the federal government. The feds passed legislation requiring the banks to do exactly what they did ...***fraudulently claim title? The federal legislation that demands banks commit fraud should be repealed, immediately!***

... and when it all fell apart the legal system and our administration stood around pointing fingers at others. ***No, the legal system ramrodded through foreclosures as fast as possible. Pam Bondi, BofA is on line 2 about your next job.***

The banks agreed to this sham justice because the threat if they did not was endless legal trials and litigation. ***Yeah, the banks agreed to this--with a giant boner in their pants! BECAUSE OF THE ENDLESS LEGAL TRIALS AND LITIGATION THAT THEY WOULD LOSE***

They did holid title! The problem came in when the federal government required the banks to bundle and sell the loans (the paper). The feds created the rules that allowed them to do that. But every state and every county has the deed registered at the court house. This is an old and serviceable requirement that nets the counties and lawyers a ton of money every year. If the bank were to go through the paperwork to satisfy the county it would take 3-10 business days and cost $40 - $100 each time the mortgage was sold. The feds in the 1999 law implied and said that this step was NOT necessary because the bank was only selling the "paper" and the ownership was assumed to follow the paper. But when the SHTF everyone ducked for cover. The authors of that law, Barney Frank and Chris Dodd shuffled their feet and tried to look innocent. Dodd even choose to resign and buy a house in Ireland (I think he was afraid of prosecution) and Frank quit a little later. The federal government did not stand up to their part of the deal and allowed the banks to suffer at the whims of local prosecutors and judges. The banks DID indeed own those homes (have a lien on them) and they did indeed transfer that ownership to the second and subsequent buyers of the paper. But that pesky paperwork the counties were responsible for was not done (the paperwork that Dodd-Frank said they wouldn't need). This "oversight" was treated by the media as though the banks did something illegal when in fact all they had done was obey federal law.

If they "had" title, why was robo-signing rampant? And even if robo-signing WASN'T necessary, what makes you think the Federal govt has authority to wipe out title registration requirements for every county in the USA?

You quite obviously are a banker or a bank sympathizer. Why you're trolling here befuddles me. People here aren't idiots--troll where people are more likely to believe your BS (USA Today perhaps). The banks AND the govt are in collusion--you're not going to get us to take one of those sides. Eff both of them.

Actually, I can second his sentiment, having done some extensive legal work on this issue (and no, I'm not currently employed by any bank). "Robosigning" is for the most part a red herring. Granted, some very egregious errors happened in some foreclosures for which recompence should be given, but they were few and far between. For the most part, "robosigning" in as much as it did happen just sped up the inevitable. E.g. Borrower was way underwater all through the life of a loan, but when time came to foreclose, an assignment from the originating lender to the servicing lender couldn't be found. This could be fixed slowly with a suit for a declaratory judgment or massive and slow coordination between financial institutions, or quickly by forgery. But the result is the same: Borrower loses the house. It's just the difference between foreclosure taking 90 days or 450 days.

The much much MUCH bigger malfeasance by financials institutions was in the origination process, before there was even a property to be foreclosed on. To blame are the jumbo mortgages, ARMs at cutthroat rates, even negative equity mortgages given to borrowers with the most scanty proof of financial means and who were uneducated (and many times intentionally miseducated) about the nature of the loans they were responsible for. They were unsustainable debt structures that were meant to be refinanced once the price of the house increased. Except, one year, the prices stopped increasing. The rest is history.

Whose to blame? Bad federal reserve policy, politicians who wanted to see home ownership increase by any means necessary, lenders who seized an opportunity to expend their portfolios and thought the good times would never end, closing attorneys and settlement agents who were neutered and/or in the pockets of the banks, crooked appraisers, sleazy realtors and mortgage brokers, and your average American homeowner with big eyes and poor math and reading comprehension skills. In short, everybody and nobody.

You hit the nail on the head. I don't think Congress mandated these loans ("the jumbo mortgages, ARMs at cutthroat rates, even negative equity mortgages") because their intent was to cause a crash. They did it hoping that poor people and people with bad credit could enjoy the benefits of home ownership. What they failed to consdier is that there is a reason why some people are poor and some people have bad credit. This should have been a "DUH!" but who says congress is intelligent. The banks didn't make those loans because they wanted to. In fact if you are old enough to have bought home before the housing crash of the late 70s and after that crash as well you will know that loans were not easy to get unless you had good credit and some money to put down. This was changed by congress and they are 100% responsible for the results and not the banks.

Gonzolo, thanks, we need someone in the media calling out "BULLSHIT!" I was an early supporter of Obama, his precinct captain, and WV Dem convention Delegate. I never dreamed he'd suck up to big bank power, be totally owned...I never dreamed the Department of Justice would not prosecute a single fraud and claw back ill gotten gains, or that SEC and DOJ would let Corzone walk free....WTF! Obama!!!! a constitutional lawyer who sneakily signs away Habius Corpus and Posse Cometadis durring Christmas NewYear holiday like the way we got the Fed up our ass in 1913... WTF!! You failed Obama, Miserably, it was a change alright ...all I can say is Ron Paul for pres and Bill Black for Attorney General or head of DOJ.

... but am I the only one who noticed that you have two Ally Bank advertisements running on your blog? Ironic and amusing! You take the banksters ad dollars which funds a site that exposes, berates, excoriates them. Sweet justice. You gotta' love it!

Good writing, and thanks for the humor too. I'm glad rense is carrying you now, even if they did get the link wrong. I emailed them about it but who knows if they read the feedback "link not working" messages. You might consider emailing them and asking them to correct it, webmaster@rense.com.I'm looking forward to more good coverage from your blog. Also, what to the background symbols stand for?

I've always felt Merkel was too quisling to be Chancellor of Germany. The Germans are a mighty people and their Chancellor should reflect that. I've always felt the Germans should do away with Merkel and elect a strong man, a Supreme Leader willing to expel the subversive internationalist and financial elements and restore German national greatness. This Supreme Leader should re-regiment, re-militarize, and re-arm Germany. Then Germany would be in a better position to force the Mediterraneans to repay their debts.

That was the Poster's joke. He was calling Mr. Lira a Nazi. Basically, making the analogy that "The Nazis didn't like international financers. So, if you don't like international financiers, then you're a Nazi."

A sad, old trick that I watch work very well pretty much everyday in American politics.

Nice call about plea bargaining a serial killer down to a speeding fine. The ironic (and sad) thing about it, though, is that actions like these will likely spawn real serial killers from a group of people who would otherwise only ever get speeding fines.

It isn't hard to envisage, after all - a regular law abiding citizen with a lot of guns loses his house, his family, maybe sees his kids living in poverty or dying of some preventable illness or suicide, and decides that the guys who created the mess are going to pay. Dark times ahead for the bankers, imo

Most people who got screwed are already out on the street, given catch-22's as to why they couldn't get any help.

The underwater folks are the McMansion / Starter Castle owners who invested in too much house at the wrong time.

I agree 100% that the MSM has ignored this or acted as cheerleaders. Wisconsin Public Radio and Television has refused to discuss this in any meaningful way-- and they take money from the banksters. Our public media from top to bottom takes money from the bankster criminals and slants or censors their coverage because of it.

They made a trillion or trillions, and now have to pay a few billions-- and the settlements get them of the hook for FUTURE crimes or specify slaps on the wrist-- codifying the profitable "cost of doing business". Obama and his crew are just extensions of BushCo.

In Wisconsin we are recalling our governor, but really it's the Attorney General who needs to be recalled for his backroom deal with the bankster criminals-- AG Van Hollen helped steal far more for the banks than the Governor and the republican legislature stole from the public employees and citizens of the Badger state.

Creating forged documents is not just a matter of an "i" or a "t". A forged document operates as a fraud on, and corruption of, the courts and is of immense legal significance.

People in America and elsewhere have been put to sleep by the media. But the other thing is this: and this is not a criticism of just America but an observation generally of societies where the rule of law is disappearing and a corrupt and unprincipled gang has effectively seized control of the government:

The great mass of people simply can't believe that the reality of their country has shifted beneath their feet. That what they have been taught about their country from kindergarten is no longer true.

How do you admit to yourself that the government has let hundreds, perhaps thousands, of wealthy and politically well connected felons simply go free? How do people admit that their public and private wealth has, and is being, looted by bailouts, ZIRP, asset purchases, and with MFG, outright criminal conversion etc? There's the Bush-Obama unconstitutional definition of presidential powers, the loss of access to the courts, unconstitutional wars, a military industrial congressional complex that the founding fathers would have associated with the likes of a Diocletian, and on and on.

People deliberately avert their eyes, they don't want to listen. They really don't want to know. And even if it's true, what are they supposed to do? So they go on about their daily lives and hope it all goes away. They vote for change, either of the right or the left, but both choices give you the same result, one wrapped in blue and the other wrapped in red. Only when the material conditions of people's existence become so oppressive to the point that they can't eat or have the basic requirements of life do they take to the streets with unpredictable results.

It's what happens when an oligarchy short circuits democracy so that electoral politics can no longer effect principled change, either of the right or of the left.

Speaking of mobs in the street, look at Brussels firefighters soak the city police with fire hoses. http://www.youtube.com/watch?feature=player_embedded&v=26dtpOZw0do#!

Also there's the report today about the Greek police union threatening to arrest IMF and other Troika operatives. Of course it's just posturing, for now.

When the Soviet Union collapsed I vividly remember watching on TV an old Russian woman swinging her handbag at a tall young good looking Russian soldier, maybe 22 - 23 years old. He was holding his rifle away from her and protecting himself from her handbag with his other arm. The Soviet system had lost such legitimacy that the young soldier could not bring himself to suppress the crowd.

*****

@ sculptorbill: Don't blame yourself for voting for Obama. He did represent himself as an agent of change. He lied to get elected and then betrayed everyone who voted for him, from progressives to white working class conservatives in places like Indiana. Even if you have serious issues with his doctrinaire economic libertarianism, Ron Paul seems like the only way to go this time around. He won't get elected but your vote will be counted and TPTB will understand exactly what that vote meant.

The Americans have lots of guns, right? "Standing militias" and "the right to bear arms" and all that? Well, when are the cowardly Americans going to follow the example of the brave citizens of Egypt, Libia and Syria and put those guns to use? You have been invaded by evil. It's time for American Revolution 2.0!

I can't answer that except to say that a lot of those gun owners are not politically affiliated with each other and are taking advantage of the free lunch without even knowing or even capable of understanding how it became to be so dangerous to do so in so few people's eyes.

This administration continues to act as though it's been bought & paid for by Big Finance.

I lost any thoughts of Obama being a principled man when he actually accepted the Nobel Peace Prize for nothing. No accomplishment - merely the "Hope" he might somehow earn it.

Imagine the laughter and derision that would result if the Academy Award for best actor went to someone who they "hoped" would do something in the years ahead to deserve it? (In a truly f*cked up way, that would upset the boobus-americanus sub-species much, MUCH more).

December 31, 2011 - a day that will live in infamy - America was suddenly and deliberately denied the constitutional writ of habeas corpus.

When he could have, should have, said "NEVER. I will fight this to my dying breath." Obama signed the despicable NDAA into law.

President Obama's announcement on the details of the banker extortion - er, mortgage agreement was made before it was even signed by the states attorneys general. When members of the press asked for a copy, they were told it hadn't been finalized.

Ah, memories of Speaker Nancy Pelosi commenting on the yet-to-be-passed Patient Protection and Affordable Care Act - "We have to pass it before we can find out what's in it."

Hmmm...I wonder what will happen in Oklahoma? The attorney general of Oklahoma will not sign the banker extortion - er, mortgage agreement.

Wow! The American banking business has just got to be the coolest biz in the world. They really do get away with everything. Even King Louis XVI of France, who absolutely got away with everything as king, finally had to render his last service as a turkey. But the American banksters are now proven above the law and possess absolute powers.

Wow again! The Greek government and the Troika cajoled and played poker. And all will be for show. Because both sides know the end game. Greece will leave, and the creditors will take big hits. Both well-deserved. Why play this game? Ah yes, maybe they want to end up like the Costa Concordia - only half sunk. It's certainly more fun than fully sunk.

Wow....an attack on two fronts...the Banskters and the MSM.You reached the point of no return here my dear friend.I hear you brother. It may be painful......BUT...it needed to be said ...LOUD and CLEAR. You are not alone.

Your quoted examples of the MSM's take on the mortgage settlement fiasco in my mind, is all part of the conditioning and de-sensitising of the populace.FACT is ..the truth is out there...you just need to find it ...AND believe it. The lesson here is to educate oneself...dont rely on MSM.

What's happening in Greece is what will happen in most Western Economies....the Loss of confidence on the part of voters and the complete lack of regard for its people by their respective Governments. Death of Democracy !!!!

One thing though GL....you didnt make the LINK in your analysis. Making the link completes the picture. You needed to go further with this. Who controls the media ?Who controls the banks ?Who controls the governments ?Who controls the FED ?There does exist an hierarchy...and it all begins with where the money resides.

were things really any different during the last Great Depression? Didn't the "solutions" of that day really favor the bankers and the politicians? Weren't the vast number of ordinary citizens reduced to absolute poverty, while governments played with meaningless policies?

I spoke to a friend who has family and relatives in Greece. You hear both sides of the situation. On the one hand, there are highly paid people (doctors, professionals) who own nice villas with swimming pools. The Greek Govt decided to increase taxes on the rich, and even hired aircraft to fly over and photograph the swimming pools. In response, the rich home owners bought roll-out carpets that were colored like grass, and installed them over the tops of the pools. So there are huge inequities, and many people who are not pulling their weight within the system.

But on the other hand, a story is also heard about a schoolteacher whose salary was 1500 euros, and now that has been cut to 300 euros. You might angue that 1500 euros is exorbitant (comparatively), but how are ordinary people going to survive when income drops 80%?? The teacher in question went out and bought two large bags of rice and beans. And that is all that their family is eating now.

Greece has reached the breaking point - of finance and politics. There is no turning back.

Teachers, firefighters and the police are the new high priests of American society.God forbid that you dare to mention that they are overpaid!If American teachers are so good and need to be paid so much, then why do American students score at the bottom of the barrel? If the police are so great then why is the crime rate in the US so high?In Miami there are about 160 applicants for every fire fighter job advertised.Meanwhile most every city, county and state in the US is broke.It's not the leaders, is the change in the US population mentality."Money for nothing and chicks for free".

To understand exactly why the settlement is really a steaming heap of shit, we have to know two items: What the issue is, and what the negotiation brings to the table to solve the problem. selling settlement